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Tuesday, September 27, 2016

First Clinton-Trump Debate: Dumb Economic Policy and Even Dumber North Korea Policy

The first presidential debate between Trump and Clinton ended a few hours ago and it was one for the history books for all the wrong reasons. For an hour and a half, hundreds of millions of people around the world got to witness sheer cynicism being masked around as political debate such as moments when Hillary Clinton talked about the importance of cyber security without a hint of irony or self-consciousness and when Trump went on an incoherent spiel about Rosie O’Donnell, Sean Hannity, and Howard Stern.

The Lincoln-Douglas Debate this was not! Not that anyone ever suspected it would be. Political debates are little more than pomp and pageantry where candidates get to flout their well-rehearsed lines and zingers hoping to spring their gotcha-traps for each other. But even when political candidates for the highest office of the land, and possibly the world, are held to such low expectations, it is amazing how they can still trip over those low bars.

I could honestly think of no other television show in history that was done a greater disservice from an absence of a built-in studio laugh track than that so-called debate.

There are many people who already have and will continue to break down the debates and go through them in excruciating detail until the next debate occurs. I wish them the best of luck. It would be akin to being told to look for gold in the Cheonggyecheon stream.

So instead, I will focus on two small portions of the debate that matter the most to me - economics and North Korea.

Economics

Economics is a complicated field. It has its own set of experts who have studied the topic their entire lives and those experts bitterly argue with one another with as much intensity as you’d find among those who argue about the Israeli-Palestinian conflict. It truly is a specialized field of its own that can also be divided into its own subgroups that are so disparate that an expert in one field could be completely clueless about the issues that deal with another.

But no layperson could ever be convinced of that when they hear politicians spout their bullshit views about economics when they try their best to dumb down the topic into easily consumable soundbites for the TV-watching audience.

Although many can convincingly argue that Clinton may be more knowledgeable about certain subjects than Trump and that Trump may be better versed in other things than Clinton, the first segment of the debate which dealt with economics clearly showed that neither person knew what the hell they were talking about.

I want us (the government) to invest in the people and their future by promoting infrastructure, advanced manufacturing, innovation and technology, clean, renewable energy, and small business, because most of the new jobs will come from small business.

I also want to see more companies do profit-sharing. If you help create the profits, you should be able to share in them, not just the executives at the top.

We have to make the economy fairer by raising the national minimum wage and also guarantee, finally, equal pay for women's work.

We're going to do it by having the wealthy pay their fair share and close the corporate loopholes.

We also, though, need to have a tax system that rewards work and not just financial transactions. And the kind of plan that Donald has put forth would be trickle-down economics all over again. I call it trumped-up trickle-down. Trickle-down did not work. It got us into the mess we were in, in 2008 and 2009. Slashing taxes on the wealthy hasn't worked.

We had the worst financial crisis, the Great Recession, the worst since the 1930s. That was in large part because of tax policies that slashed taxes on the wealthy, failed to invest in the middle class, took their eyes off of Wall Street, and created a perfect storm.

We can deploy a half a billion more solar panels. We can have enough clean energy to power every home. We can build a new modern electric grid. That's a lot of jobs; that's a lot of new economic activity.

When I was secretary of state, we actually increased American exports globally 30 percent.

Here’s an old challenge. Please name any economist outside a mental institute who has ever defended or called for trickle down economics.

Please cite evidence that the 2008 financial crisis was a result of low tax rates. Otherwise, please be prepared to be called a bullshit artist.

See rebuttal number 1.

Does the Secretary of State oversee trade?

Well, that was easy. So much for a smart and experienced Hillary Clinton.Image Source

What Trump said about the economy:

American jobs are fleeing the country.

China is devaluing its currency, and there’s nobody in our government to fight them.

I'll be reducing taxes tremendously, from 35 percent to 15 percent for companies, small and big businesses.

We have to renegotiate our trade deals. Other countries are giving incentives, they're doing things that, frankly, we don't do.

Impose a tax on American companies that manufacture their goods overseas and then sell them in the US.

Bill Clinton approved NAFTA, which is the single worst trade deal ever approved in this country.

I built an unbelievable company. But we’re opening the Old Post Office. Under budget, ahead of schedule, saved tremendous money. I’m a year ahead of schedule. And that's what this country should be doing.

My rebuttals to Trump:

Trump spoke a few times about the employment situation in Ohio and Michigan. So in other words, he is talking about manufacturing jobs. But the reality is that the American manufacturing sector is still robust.

That’s actually a pretty nifty idea. Inversions are one of the most visible signs that the U.S. corporate-tax code is broken. One of the reasons Ireland is a popular destination for corporations looking to move their headquarters out of the United States is the fact its corporate tax rate of 12.5 percent - about one-third of America’s rate. Cutting corporate tax rates could potentially help to create hundreds of thousands of new jobs and it could also lead to a significant increase in real wage. The question is how Trump intends to do that. As per usual, he doesn’t offer any concrete plans.

(i) This will come as a surprise to the TPP’s 12 signatory countries that agreed they would not renegotiate the trade deals that have already been made. Seeing how the US is the major partner in the TPP, reneging on that promise would destroy the TPP and would destroy the Asia Pivot.

(ii) Trade means increased jobs, but trade also means increased security. Reneging on its trade deals would be comparable to the Ming Dynasty suddenly choosing to become an isolationist hermit kingdom in the mid-15th century, after pursuing oceangoing exploration in the early part of the century. China could have been a superpower hundreds of years before the rise of the West. Is the US willing to become the new Ming China of the 21st century?

Is Trump talking about companies with captive offshore operations (the practice of completing work at a non-domestic location, whether by workers at a company’s own offshore subsidiary - often called a “captive” center - or by a third-party or companies that outsource to third-parties based overseas) or is he talking about companies that outsource (the practice of contracting out of goods or services to a third party)? Does he even know the difference?

This is an important distinction because targeting companies that operate subsidiaries overseas would include, for example, IBM and a good number of non-vendor Fortune 500 companies who maintain a presence abroad, such as GE and Proctor & Gamble, some of which provide their parent companies with IT services.

On the other hand, if it does not affect US companies that “ship jobs overseas” by hiring an offshore company, then the only offshore outsourcing customers this plan could have any bearing on are those who work with US-based IT services companies like IBM, which then deliver those services offshore. If that is the case, it's unlikely the the average American would have much to benefit.

Also, how would increasing taxes on those companies persuade businesses to relocate to the US? Taxes are not the only reason companies outsource. There are also lower wages in overseas markets. The likely outcome of increasing taxes on such businesses could be more offshoring, not less, as those corporations use labor arbitrage to offset the bigger tax bill.

The idea that it would be better for the government to be run like a finely operated corporation has always been fancied by those on the political right. For good or for ill, however, a government cannot be run like the way a business is run. See here, here, here, here, here, and here.

Very little was said about North Korea. So my response will be short, too. Trump said, “China should go into North Korea. You look at North Korea; we are doing nothing there. China should solve that problem for us. China should go into North Korea. China is totally powerful as it relates to North Korea.”

My rebuttal:

Assuming that the US even has the leverage to “let” China do anything, allowing China to install a pro-Chinese regime in Pyongyang would infuriate not only Seoul, but also Tokyo, Moscow, and Hanoi. It would most likely be the best way for the US to actually become what Chinese nationalists have called it for decades - a paper tiger.

It is obvious except to the most deluded that the only place where Trump is a brilliant strategist or a deep thinker of any type whatsoever is in the deep recesses of his own twisted fantasies where he ought to crawl back into.

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About Me

My name is John Lee and I am currently the editor and writer behind the independently-run blog, “The Korean Foreigner.”

Recently, I have also begun to work as a freelance copy editor for Freedom Factory. Here, with permission from Freedom Factory, I shall post English translations of Freedom Factory’s weekly newsletter “Freedom Voice.”